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Three Principles for Health Care Reform

There is perhaps one thing that both conservatives and liberals may agree upon and that is the need for health care reform. Not only are the costs escalating, but access to quality, affordable coverage is a problem. This is especially true since Congress prepares to take up debate on this issue. The recently announced political photo-op session where the health care industry proposed $2 trillion in savings over the next decade through some amorphously defined cost-saving scheme leaves one wondering where these clowns were two years ago? They, as others have pointed out, are merely positioning themselves at the inevitable negotiation table. Regardless, everyone agrees that if you do X, Y, and Z, then A, B and C will result. The problem is how to do the X, Y, and Z and that is where the real differences come in. Before discussing those differences, two points.

First, the oft-cited number of the uninsured in America is an appalling 47 million- appalling, that is, until you look into that number. About 11 million of that number are illegal immigrants and their children. Since they lack insurance and since federal law prohibits the denial of medical care, their doctor of choice is the costly emergency room which everyone here legally ends up paying for. That problem needs to be addressed and not necessarily on this platform. Hell, even that blabbermouth Michael Moore agrees that American citizenship be a prerequisite for universal health care. Of the remaining 36 million, an estimated 17 million make greater than $50,000 per year and could, conceivably, purchase private health insurance, but opt not to. Then there are the people who are eligible for Medicaid but who neglect to sign up for it. Finally, since employer-provided health insurance is the primary means of coverage, losing one’s job equals loss of coverage. Yet 45% of these people get benefits within four months. Hence, the true number of chronically uninsured Americans is closer to 8 million people. Admittedly, this number is still rather high, but covering 8 million rather than 47 million puts the task in perspective. However, as a shock tactic, the liberal left likes to use the larger number.

Second, the definition of insurance is that it is a form of risk management. It can be thought of as a guaranteed small loss (the premium) to prevent a larger, potentially devasating loss. Look at other types of insurance. You don’t put in a claim with your car insurance for an oil change or brake adjustment nor do you make a claim with your homeowner’s insurance because your house’s trim needs painting. Yet, the opposite is true with health insurance. The entire system is completely out of whack in that it encourages the use of the doctor’s office and the emergency room for what may amount to nothing more than the common cold. Annual doctor’s visits, or more regular visits for at-risk populations, makes sense in the model of preventive medicine. However, generally people treat insurance as a blanket for anything of a perceived medical nature, but unfortunately it is the people who use insurance as intended that pay for the others. Put another way, conservatives may view “insurance” in the traditional sense while liberals perceive health care coverage as a God-given right. Actually, there is no basis for this in history as health care coverage for sicknesses did not occur until 1890 and payments for well visits did not occur until forty years later. Prior to that, routine visits were paid fully out-of-pocket. So, there is no practical or historical basis for the liberal perception in this country.

And moving forward, Obama and company essentially cloak their vision of health care reform into free market language, but it is anything but free market. What they aim to do is crowd out private insurers and replace it with some big government entity to administer and control health care in the United States. This has been tried and it has failed. Domestically, all one needs to do is look at Medicare and see how badly the government runs a sort-of-funded program. Can you imagine the debacle their government-run health care would be in the US if they achieve their goals? Overseas, Great Britain’s National Health Service is an international joke. Canada is often looked to as a template for reform. But this story is not out of the ordinary: do you want to wait 40 hours in an emergency room to see a doctor only to be admitted to a non-private ward with 11 other patients? Is that the “quality” of health care we want in America? That is why Britons and Canadians come here to receive what we now consider routine medical procedures and you don’t see Americans flocking to British and Canadian hospitals. While you have the certainty of the government paying your bill, you have an even greater uncertainty: access to quality health care on demand. The rationing of services is a necessity under any socialized health care plan.

Instead, wouldn’t it make greater sense to have health care reform that is just that- reform? Instead of Obama’s dismantling of the existing system and reinventing it through some government entity, reform what exists first. During the Presidential campaign, McCain floated the idea of eliminating preferential tax treatment for employer-provided insurance and instead granting tax credits. This would allow individuals and families to purchase their own insurance regardless of employment. This would necessarily require changes in regulations on the insurance industry and in October, 2008 the word “deregulation” was verboten. But consider this personal analogy: in November 2008, I shopped on-line for new car insurance. Although I found a new carrier for slightly better coverage at slightly less cost, I received no less than 15 solicitations through various sources for my business. Imagine if that was the case for health insurance? People could choose the coverage that best fits their needs and is the most cost-effective for them individually and as families. That is how the free market is supposed to work. With the employer-based system, you are offered a one size fits all policy- take it or leave it. Of course, (sorry hard core conservatives), there may be the need for certain regulations within that free market to ensure that it is also a fair market.

Conversely, conservatives are often averse to “mandates.” However, they would be necessary if one of the goals is universal coverage. If you grant tax credits to purchase health insurance, you do not encourage a person to use this as bonus money. Regardless, mandates are rather accepted in the insurance industry. For example, states mandate that you carry insurance on your motor vehicles under threat of penalty. Mortgage companies mandate that you maintain homeowner’s insurance on your property. If conservatives can accept mandates and liberals can accept free and fair market solutions to health care insurance in America, it will go a very long way to preserving capitalist solutions rather than resorting to the socialist concepts this administration appears to endorse and would most likely be more costly to all, especially the tax payers.

Hence, as the debate moves forward, these three facts need to be kept in mind and be the guiding principles. First, the “problem” is not really as large as the doomsayers would have us all believe, but a problem nevertheless. Second, we must be cognizant of the reason for insurance in the first place- that it is a hedge against devasating loss, not to be used every time Johnny gets the sniffles or you don’t get the answer you want from doctor A so you go to doctor B and C and D until you get the answer you want. Third, health care reform needs to be just that- reform- not a dismantling of the existing system and replacing it with costly, ineffective, fraudulent and wasteful government-run programs. The reform needs to be based on free and FAIR market principles.